Initial Price, Breakeven, Expiry

Initial Price

This is your “Strike”. The Initial Price of Impermanent Gain options is set by the market price of the underlying token at the time of creation of the options (which happens at the start of each epoch).

Example:

• ETH/USDC Impermanent Gain options get minted at 12 p.m.

• At that time, ETH was trading at $2,000.

• $2,000 is the “Initial Price” or strike price (“at-the-money”) of the Impermanent Gain options.

Among other factors, Initial Price is a primary driver of Impermanent Gain options value as it sets the breakeven point for your trade.

---

Breakeven

This is where your profit = $0.

In other words, the value of your Impermanent Gain is equal to the premium you paid for it. If the price of the underlying token surpasses the given “Breakeven” point of your Impermanent Gain option, you profit.

---

Expiry

The date when the final value of the Impermanent Gain option is determined.

If the price of the underlying token fails to surpass/fall below your “Breakeven” before the date of “Expiry”, you suffer a loss. The maximum loss is when the token price at expiry falls exactly on the strike price, because the option payoff is zero therefore the maximum loss equals the premium paid. Clearly for Impermanent Gain Bull and Impermanent Gain Bear the maximum loss also occurs when the price of the token at expiry is below the strike and above the strike, respectively.

You can never lose more than the premium you paid.

You are not forced to hold the option until expiry, you can sell your Impermanent Gain option back to the Synthetic AMM at any time.